Global Coffee Prices to Rise Amid Drop in Vietnam Supply

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Depleted Vietnam coffee stores could push up global prices.
Depleted Vietnam coffee stores could push up global prices.

Vietnam’s large stockpile of coffee beans is diminishing, a development that is expected to push global coffee prices even higher.

Traders surveyed by Bloomberg predict that stockpiles will be cut in half by the end of September compared to the same time last year. Output by Vietnam, the world’s largest exporter of robusta and second-largest coffee grower, is anticipated to experience a continued decline in 2022-23.

The shrinking reserves and unfavorable harvest prospects are occurring at a time when worldwide coffee consumption is recovering from a pandemic-induced decline.

Robusta, which is used by instant coffee companies such as Nestle and in espresso blends, is making a comeback. The variety, which is typically less expensive than arabica, is in high demand as people seek alternatives to minimize the effects of inflation.

According to Customs data, bean availability in Vietnam has decreased as bean exports jumped 17% to 1.13 million tonnes from January to July compared to the same period last year. The boost in exports has been supported by a better supply of containers and ships, but it may be difficult to maintain given the shrinking stockpiles.

 

Phan Hung Anh, Chief Executive Officer of Quang Minh Coffee Trading in the southern province of Binh Duong, expressed concern about a scarcity lasting until early November.
“We are worried,” he told Bloomberg, stating that local growers are likely keeping only around 2% of their annual crop, compared to roughly 13% a year ago.

After drought and frost reduced Brazilian production, the global coffee market is facing one of the largest deficits in recent years.

According to reports, Colombia is struggling with crop-damaging rains, while Honduras, Guatemala, and Nicaragua are running low on supplies. Next-season crops in Costa Rica and Uganda are also stressed due to drought.

Meanwhile, a drop in the planting area for more profitable fruit trees and a rise in fertilizer prices will probably affect production in 2022-23, according to Do Ha Nam, Intimex Group’s chairman, and the Vietnam Coffee and Cocoa Association’s deputy head.